COVID-19 - Mortgage Payment Holiday for Landlords

The recent upheaval created by the COVID-19 world pandemic is unprecedented, in the western world at least, in modern times. Almost the entire world economy has ground to a halt, with government requests to stay at home and wait out the upcoming wave of new infections. This is all well and good, but most of us have mortgages and other bills to pay. What can we do now?

For owner-occupiers with a personal mortgage, the good news is that the UK Chancellor of the Exchequer, Rishi Sunak, has set out government policy which will allow banks to grant 3-month mortgage payment holidays to those that need them. The payments will roll-up onto the capital owed and interest will be charged on this balance in the usual manner.

Initially, buy-to-let borrowers were excluded from this policy, but they too are now covered. The government is suggesting that individual borrowers should contact their mortgage lender to try and work out a way forward. In the meantime, no tenant may be evicted during the crisis and landlords may ask their lender for a 3-month mortgage holiday.

Business tenants are also protected against foreclosure proceedings until at least 30 June 2020. This backstop date might be moved back in time.

Whether you are an owner-occupier or a private landlord, the most important thing is not to panic or put your head in the sand. If your tenant stops paying rent, start a dialogue. Make sure they are aware of all the assistance they can expect from the government both in terms of housing costs and other income.

Many workers that are at home should be paid 80% of their income up to £2,500 PCM under the government’s furlough scheme. This has now been extended to the self-employed and freelancers, as long as they have previous accounts to validate their average past income.

Help is also offered in the form of council tax rebates and possibly even help with paying rent. The most important thing is to make sure your tenants are making claims now, as they are rarely able to backdate claims.

In most cases, the government seem keen to make sure that missed mortgage payments, when agreed with the lender, will not damage your credit history. And the good news is that with interest rates now at an all-time low, borrowing remains cheap!

The Financial Ombudsman Service is an agency for arbitrating on unresolved complaints between regulated firms and their clients. More detail can be found on their website: www.financial-ombudsman.org.uk